Swinging Pendulum of Peer Review Immunity

AAEM Comment by Robert McNamara, MD FAAEM AAEM has steadfastly advocated for due process in EM contracts.
This article points out the vulnerability of physicians despite access
to "due process." The courts have provided substantial protection to the
hospital and medical staff. It is important not to be lulled into a false
sense of security by the provision of due process in your contract. You
need to be careful in your dealings despite your arrangement. On the other
end of the spectrum, there is little that AAEM or folks like the author
of this piece can do for you once you sign a contract that eliminates
your right to due process through a "termination without cause" provision.

Swinging Pendulum of Peer Review Immunity

by Charles I. Artz, Esq.

Recent appellate court decisions in Pennsylvania and other jurisdictions
raise the question whether the immunity afforded hospitals and reviewers
under the federal Health Care Quality Improvement Act (HCQIA) have allowed
the peer review system to be improperly utilized, or even abused in some
cases.

HCQIA was enacted by Congress in 1996 to provide immunity against civil
litigation damages for physicians and hospitals engaging in professional
peer review, and to restrict the ability of incompetent physicians to
move from state to state without disclosure or discovery of prior damaging
or incompetent medical performance. Immunity under HCQIA can be established
if the peer review process meets four general standards:

It had an objective, reasonable belief that its action furthered quality
health care.

It made an objective, reasonable effort to obtain the facts.

Under the totality of the circumstances, the physician being reviewed
received adequate notice and hearing (i.e., due process) procedures.

The organization had a reasonable belief that its actions were warranted.

Superficial review of this four-part test suggests physicians should
receive due process throughout the entire peer review, and serious quality
of care issues must exist before a physician's privileges can be suspended,
reduced or revoked. Case law and experience demonstrate the contrary.

Bias and Conflicts of Interest ImmaterialIn Manzetti v. Mercy Hospital of Pittsburgh, the Pennsylvania Supreme
Court held on July 18, 2001, that the hospital and reviewers were entitled
to immunity under HCQIA. The Supreme Court disregarded all evidence relating
to the reviewed physician's competitors' involvement in the case and attacks
against him. The Court stated that any self-interest, bias or conflicts
of interests by the reviewers were immaterial. According to the Court,
the only time HCQIA precludes an economic competitor from involvement
in the internal peer review process is at the hearing panel phase of the
case; however, HCQIA does not preclude economic competitors from perpetrating
due process violations and inculcating bias throughout the early phases
of the review process. Under most hospital bylaws, by the time the physician
gets to the fair hearing panel, the burden has shifted against the physician
with the requirement that the physician prove by clear and convincing
evidence that all prior decisions were arbitrary and capricious or factually
baseless. Practical experience demonstrates this is a virtually impossible
burden to sustain and standard to satisfy.

The Supreme Court also held that the "reasonable effort" prong of the
four-part HCQIA immunity test is satisfied if the review activities are
"sensible," but they do not have to be "flawless." Thus, the Supreme Court
has countenanced due process violations and errors in the peer review
process.

Sloppy, Negligent and Wrong Peer Review Warrants ImmunityIn Donnell v. HCA Health Services of Kansas, Inc., the Kansas Court
of Appeals held on July 6, 2001 that physician peer reviewers are immune
from liability under HCQIA even if their investigations are sloppy, negligent,
and wrong. Physicians must prove bad faith and malice to have a peer review
decision overturned.
This decision, like Manzetti above, allows a hospital to make serious
mistakes about the quality of a physician's health care. It also permits
termination of the physician's staff privileges, and the detrimental effect
of a Data Bank entry, all with immunity from liability and practical impunity.

One Mistake and Done: Free Ride for AbuseIn Meyer v. Sunrise Hospital, the Nevada Supreme Court held on May
15, 2001, that a hospital's decision to terminate a physician based upon
a single incident, regardless of the high quality of care the physician
provided throughout the remainder of his career, was sufficient to protect
the hospital under HCQIA's immunity provisions.

One Justice on the Supreme Court recognized the unfairness of the statute,
but was compelled to uphold the decision. The Justice noted that HCQIA
can sometimes be used, "not to improve the quality of medical care, but
to leave a doctor who was unfairly treated without any viable remedy."
That Justice also stated: "basically as long as the hospitals provide
procedural due process and state some minimal basis related to quality
health care, whether legitimate or not, they are immune from liability,
which leaves the hospitals free to abuse the process for their own purposes."

No Constitutional InfractionsIn Freilich v. Board of Directors of Upper Chesapeake Health, Inc.,
a federal court in Maryland held on May 14, 2001, that the HCQIA immunity
provisions do not violate due process or equal protection under the U.S.
Constitution.

Review Must Be 100% Wrong?In Brader v. Allegheny General Hospital, 167 F.3d 832 (3rd Cir. 1999),
it was proven that the hospital's outside expert report had several incorrect
conclusions. The Court of Appeals, however, ignored these mistakes because
it found the report to be "otherwise thorough." The Court implied that
the expert report must be entirely mistaken, and that the mistakes must
be obvious. Because they were not, the hospital's decision was not unreasonable,
and the first and fourth prongs of the HCQIA immunity test were satisfied.

Bias and Mistakes Early and Often Mean NothingIn Gordon v. Lewistown Hospital, 714 A.2d 539 (Pa. Cmwlth. 1998),
Commonwealth Court found that there is a presumption of validity of the
hospital's disciplinary procedures. An outside consultant was retained.
The Hearing Officer was an attorney, who was determined not to be in economic
competition with the physician, but was a neutral party. Even though some
of the physician's direct economic competitors were involved in the decision,
and there was evidence of a history of hostility toward him, none of those
individuals participated in drafting the outside report. The Court then
looked to the totality of the process leading to the professional review
action. Under that broad test, even though some parts of the process were
critically flawed and biased, the Court said, in totality, the physician
got all the process he was due.

These cases are the latest in a series of decisions nationwide leaving
physicians who are subjected to peer review without any legal remedies,
and without any right to secure a fair hearing and a fair outcome.

The Dreaded Data Bank An "adverse action" following peer review results in the hospital
reporting (through the Medical Board) the physician to the National Practitioner
Data Bank, commonly referred to as the "Data Bank." Many reports conclude
physicians' care was "incompetent," "unprofessional" or other professionally
disastrous terms. Economic experts have opined that such a negative statement
in the Data Bank directly results in substantial economic loss to a physician.
The Pennsylvania Supreme Court in Hayes v. Mercy Health Corp., 559 Pa.
21, 739 A.2d 114 (1999) stated that a physician's Data Bank entry may,
if left unchallenged, have a deleterious effect on the physician's medical
career.

Money and VengeanceThe author has represented orthopedic surgeons, cardiologists, OB/GYNs,
thoracic surgeons, anesthesiologists, ophthalmologists, family physicians,
internists and other specialists in hospital peer review cases and medical
staff privileges litigation. More often than not in the author's experience,
peer review is initiated against a physician for one of three reasons:
(1) by economic competitors for financial reasons; (2) in retaliation
against the physician for not "playing ball" in one manner or another
(economic or otherwise); or (3) in retaliation for the physician raising
concerns about other physicians' care and seeking to have those providers'
outcomes reviewed. The state "whistleblower" law does not protect these
physicians. The Pennsylvania Peer Review Protection Act, which allows
physicians to litigate tort and contract breach claims in state court
against hospitals whose peer review is effectuated by malice or bad faith,
has been "trumped" (although not technically preempted) by the federal
HCQIA immunity standards.

Shifting SandsHospital bylaws impose difficult legal standards and burdens on physicians.
Typically, after a physician is the subject of an adverse recommendation
or an adverse action by a medical executive committee, the physician is
given a fair hearing. Traditional notions of fairness might lead one to
believe that the hospital would have the burden of proof by at least a
preponderance of the evidence to demonstrate the physician's quality of
care was below some recognized and measurable standard warranting a quality
of care concern. After all, hospitals have a legitimate concern about
corporate liability and "negligent credentialing" following the Supreme
Court's Nason Hospital decision in 1991.

Absolutely every set of hospital bylaws the author has reviewed do not
contemplate a truly fair system for the physician being reviewed. Instead
of the hospital accepting the burden of proof with a reasonable standard
based upon measurable guidelines for quality infractions, the bylaws shift
the burden of proof to the physician and create a nearly impossible standard
to overcome. The physician typically has the burden to prove that the
hospital's decision was arbitrary and capricious. Some bylaws even state
that the physician must prove that there was no material basis for the
action or there was a complete absence of facts in the record to support
the action. An utterly biased, sloppy, negligent and mistake-riddled report
by an outside reviewer still cannot be overcome by this enormous burden
if there is just a shred of truth in the report.

Practical EffectAs the case law outlined above illustrates, the physician's economic
competitors and antagonists can initiate the peer review process, retain
outside consultants and virtually direct the outcome of the report that
will form the basis of the hospital's adverse action. After the antagonist's
bias, conflict of interest, self-interest, direct economic competition
and retaliation motives are all effectuated, they are immaterial and not
reviewable by the courts, since all of those problems purportedly can
be remedied by retaining a three-member independent panel to conduct the
hearing.

Most fair hearing panels are truly independent. But, even if the panel
calls "balls and strikes" fairly, the burden of proof and standard of
review are so high it cannot be overcome practically. There is no legal
remedy or recourse to the physician under the "totality of the circumstances"
test. Hospitals have figured out that all they need to do is establish
an independent fair hearing panel, give minimal due process at that final
phase of the case, and their immunity will be intact.

JCAHO Doesn't CareThe JCAHO accreditation manual for hospitals contains medical staff
standards. One standard requires "mechanisms, including a fair hearing
and appeal process, for addressing adverse decisions for existing medical
staff members and other individuals holding clinical privileges for renewal,
revocation, or revision of clinical privileges." When discussing the broad
HCQIA immunity and typical hospital bylaws burden shifting and standard
setting procedures that are anything but fair and balanced, JCAHO staff
take the position that they "don't care about detail" even if, as applied,
the physician has no chance to overcome the standards.

Courts Don't CareAlthough courts have no hesitancy involving themselves in the intricacies
of physician practice in the context of medical malpractice liability,
courts take a contrary view when physicians seek redress as a result of
faulty peer review and retaliation. In Lyons v. St. Vincent Health Center,
Commonwealth Court stated: "It is not up to the courts to second-guess
hospitals in their decisions as to the best way to deliver services; it
is up to the institution itself."

Early Intervention StrategyA physician subjected to peer review may have little chance of surviving
unless early and aggressive measures are taken. Understanding the case
law and limitation on judicial remedies, it is prudent for the physician
and counsel to quickly retain the best conceivable expert in the subject
area to address the outside reviewer report. In many cases, it becomes
very clear that the outside reviewer's report significantly overstates
quality of care infractions, is based on no published peer reviewed medical
journal articles or positions, and is academically pedantic without taking
into consideration reasonable and acceptable standards of care.
Successful resolution using this strategy can be achieved with minimal
disruption to the physician, including perhaps CME and monitoring, without
causing a damaging Data Bank entry.

Statewide Independent Peer ReviewThe process described in this article has led many physicians, and
some organizations, to propose a statewide peer review requirement that
would utilize independent, non-biased peer review organizations that make
judgments based upon clearly acceptable standards, taking into consideration
reasonable differences of opinion. Like a physician being judged for a
licensure infraction, the burden of proof would remain on the entity seeking
to impose discipline (the hospital) with at least a preponderance of the
evidence standard, if not a clear and convincing standard. Only this level
of independence would balance the playing field and return quality of
care to the forefront of peer review.

Charles I. Artz, Esq., is the founder of the law firm Charles I. Artz
& Associates, located in Harrisburg, Pa.

This article originally appeared in Physician's News Digest. Please visit
their website at www.physiciannews.com
for additional information. Reprinted with permission.